What is the present value cost of lease

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Reference no: EM131955846

An apartment requires a 12-month lease. The terms of the lease require you to pay $1,000 upfront when you move in (the first month's $500 rent, plus a $500 security deposit). You then must pay $500 monthly per month, except at the end of the 12th month when you do not pay but receive your $500 security deposit back. What is the present value cost of this lease to you if your prevailing interest rate is the 1.0% per month?

Reference no: EM131955846

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